Ikea Invades America Essay

Founded in 1943 by a poor Swedish farmer named Ingvar Kamprad, IKEA is now one of the largest article of piece of piece of piece of furniture retailers in the world. From its inception, Kamprad wanted to create rubbishy, lineament furniture that everyone could afford. That formula led to IKEAs early triumph in Sweden and has carried oer until today. To its clients, IKEA is not just a store but a way of life, which may be manifest through the cult-like following the company has achieved.When talking about the four Ps of marketing ( carrefour, price, place, promotion), on that point are few companies in the world that fill mastered this concept better than IKEA. IKEA has been able to tell apart the demands of its shoppers and create compelling products that meet those demands at a reasonable price. Its products are sold at fantastic stores that serve strategically important, geographic markets. This paper examines the factors that stir made IKEA such a big success and c onjures some recommendations for future growth in the United States.Today, IKEA has all over 240 stores in 35 countries and has revenues of over $26 billion. Its revenues double every 5-6 years and the company is now expanding to growing markets like China, Japan, and Brazil. The future of IKEA looks brighter than ever. For a draft snapshot of IKEAs current sales around the world see Appendix 1. In 1985, IKEA fixed to invade America. Faced with this early failure, IKEA retooled its furniture to fit American tastes. IKEA soon became the fastest growing furniture retailer and the 14th largest furniture retailer overall in the United States.IKEA executives needed to realize a balance of how to create reinvigorated furniture offerings without losing its unique design and corporate soul. By examining IKEAs marketing strategy and answering a series of four questions, we have developed recommendations (see Appendix 2) that we think go forth lead to IKEAs continued growth and success. 1) What are some of the ways that furniture retailers have seek to overcome these purchase obstacles? a) identifying a product that consumers like, b) visualizing the product in the consumers home, and c) getting the product in the consumers home?In furniture sales, there are two general strategies the low-end and the high-end. The low-end offers cheap, utilitarian furniture that is dreary looking. Cheap furniture is marketed to people such as college students who have a small budget. The cheap furniture is also displayed in poorly lit showrooms that offer little to no customer attend. High-end furniture stores compete on quality and service. The high-end offers a large selection in each style and sub-style of furniture, which results in the showroom having a large inventory. The broad, variety strategy virtually guarantees that a customers like style will be available.The high-end stores also have high shadow sales associates to help customers with product selection and furni ture measurement. Sales associates are trained to educate their customers such as explaining the life spans of opposite materials. They also reassure customers that their furniture will last a life time. Visualizing a piece of furniture in a persons home can be very difficult. The high-end furniture stores have beautiful showrooms that are elaborately decorated to help the customer visualize where they can place refreshed furniture or how they can redecorate their home.High-end stores also offer interior design go. Most retailers offer credit to make high-end furniture more affordable. All retailers offer home pitch shot, sometimes free, to make the changeover as painless as possible for the customer. As an added bonus, retailers offer to assemble the furniture in the customers home. Sometimes, delivering the furniture also involves rearranging furniture, as well as removing and discarding old furniture. Providing these services makes the purchase of new furniture an easy and w orry-free process. 2) Explain IKEAs reverse set strategy.IKEA created a matrix used to prioritise product lineup and price. (See Appendix 3) Primarily the matrix is used to set a target retail price and select a product style. With the matrix system, IKEA is able to identify product line opportunities and gaps creating a well rounded store. IKEA has avoided the image of the low end furniture store by displaying furniture in brightly lit showrooms. These showrooms help customers envision how the furniture interacts with the allotted space. Plus color coordinated cards provide design tips and information kiosks are on hand to help customers.All of these features reinforce IKEAs self service ethos without making the customer feel abandoned. In IKEAs case, the firm rejected the metre business models for both high-end and low-end furniture stores. IKEAs furniture is composed of cheaper parts that are not gross and are not under high stress through use and a higher quality material is used for the visible parts or parts under high stress. This gives IKEAs furniture a higher end look while keeping their apostrophizes low. IKEAs reverse positioning kept prices low, while eliminating many services thought essential to a higher-end store.The company replaced them with unique services for its category a bright, inviting showroom, furniture that was attractively intentional, a child care center, a restaurant percentage Swedish meatballs, and brightly colored house wares and clever toys. As a result, IKEA successfully avoided the feel of the low-end retailers, and customers find the IKEA shopping convey to be immensely appealing (Moon, IKEA Invades America, 5). 3) What are some of the various product/service attributes that IKEA has chosen to withhold from its customers?IKEA seems to hold in a hybrid strategy tensenessing on both cost and differentiation. IKEA attempts to price in the low to midrange category. IKEA does not build its furniture to last a lifetime, which in-fact flows well with its ad campaigns focused on letting go of the semimetal value Americans often place on furniture. IKEA products are cognize for falling apart after a few years however, its customers are typically satisfied with the look, functionality, and affordability of IKEA products (Moon, 2004, p. 5).Its focus is on cost-efficiency, so the company uses higher-quality materials on visible surfaces and lower-quality materials elsewhere. High-end stores compete on quality and high touch sleep together and selection. Nearly all types of furniture stores offer delivery services. However, IKEA successfully eliminated many of these attributes. IKEA products are designed to be transported unassembled in flat boxes, which keeps shipping costs low and proceeds IKEA from having to deliver/assemble furniture for customers (Moon, 2004, p. ).Customers are responsible for transportation of their furniture and assembly of their furniture. Although this step may seem like its decreasing the consumer experience/perceived product value its actually keeping the customer involvement level high. Moreover, the warring pricing offered at IKEA is attributed to letting customer build their own furniture, which keeps costs to a minimum. Formerly, IKEA only produced a few different designs however, this has changed in recent years.In order to be consistent with IKEAs self-service ethos and to keep costs low, the ratio of sales assistants to customers is kept low. The low number of sales associates can have a negative effect on the consumer experience. To handle furniture questions, customers are provided with product descriptions and measuring tapeline so they can make their own measurements. 4) What are some of the areas that IKEA has managed to achieve cost efficiency by implementing a number of firm-specific operation processes? A number of cost effective operating processes have been utilize by IKEA.In furniture design, IKEA engineers often select cheaper/lo w quality materials for less visible areas that experience minimum stress and expensive materials for visible areas that undergo stress. This aids IKEA in producing durable, good-quality products at low costs. IKEA has worked with over 1,800 suppliers in over 50 countries and often uses suppliers from developing countries. To keep costs down, IKEA usually purchases in the great unwashed and often orders various components of a given product from different suppliers. IKEA is strict with employees about waste it enforces minimal travel budgets and requires them to save electricity.IKEA keeps a small staff in stores and provides self-serve trolleys to aid consumers in loading their vehicles. typical furniture retailers require a larger staff and/or incur shipping costs for delivery of their bulky, already assembled products. Flat furtherance allows IKEA customers to transport their purchases home and eliminates the expense of home delivery. IKEAs flat packaging strategy is another firm specific operating process. The strategy was inspired by an employee who, in 1955, withdraw the legs off a table to fit it into a customers car.This strategy requires designers to keep in mind the amount of space their products take up in their unassembled form. Flat packaging also helps prevent damage to the products during the shipping process. IKEA will often redesign their products multiple times to achieve space optimisation and reduce shipping costs. Space optimization typically lowers prices for consumers however, it may lengthen the assembly process. IKEA should continue to incorporate cost cutting activities across the board so long as the consumer experience remains positive.